Everyone knows that when the Kansas governor lays his head down on the bed at Cedar Crest, the governor’s mansion in Topeka, that he has dreams of eliminating one of the most popular tax deductions used by some 315,000 Kansans: The deduction of the interest payments made on home mortgages.

He wanted to eliminate it last year as part of his drastic cuts in individual tax rates, but more level-headed legislators prevailed and Kansas homeowners again were able to take advantage of the deduction in 2012.

Well, it’s no surprise that Brownback is again seeking the elimination of home mortgage interest deductions as part of his continued attack on state income tax rates. In fact, most legislators expected it to be part of his tax plan for the 2013 Legislative Session.

But what they didn’t expect, was what Brownback dreamed up and put in his tax proposal AFTER his State of the State Address: The elimination of deductions for property taxes claimed by more than 370,000 Kansans annually.

In fact, that one caught a lot of legislators, conservative and otherwise, by surprise. According to the AP story, Budget Director Steve Anderson said that tidbit of information was released after the governor’s speech and placed into the budget proposal by the Department of Revenue and was “put in without me.”

The response from the Department of Revenue about the insertion?

“It’s the governor’s tax plan.”

Oh, that Sneaky Sam!

Elimination of the two deductions is expected to bring in $231 million and maintaining the current sales tax rate would bring in another $262 million.

It should come as no surprise that Brownback needs to find new revenue. After reducing state income tax rates last year, legislators are looking at a projected $267 million budget shortfall for the fiscal year 2014 budget. That could jump to more than $700 million if legislators are forced to find an additional $450 million for public education, which Shawnee District Court judges recently ruled the state must fund.

And yet, Sneaky Sam wants to continue to move towards elimination of individual state income tax (see the New York Times’ article). Brownback’s tax plan would decrease individual state income tax rates for a second straight year and calls for automatic reductions in the future. Brownback says his plan will draw businesses to the state, create jobs, and boost the state’s economy. He predicts that an increased economy along with maintaining the state sales tax rate and eliminating deductions will more than offset the state’s lost tax revenue while being beneficial to individual Kansans.

Also under Brownback’s plan, tax rates automatically would be reduced if state revenues grow by more than 4 percent in a year — provided the state has healthy reserves.Basically, Brownback’s plan is just a shuffling of monies.Brownback, being the career politician he is, knows exactly what he’s doing. He wasn’t able to eliminate the home mortgage interest deduction last year. So, he puts that back into his budget plan this year and, adds a twist by wanting to eliminate the property tax deductions. It’s double legislators will approve cutting property tax deductions, but as a “compromise” don’t be surprised to see lawmakers present Brownback with a budget that includes cutting the home mortgage interest deduction, which the governor will sign with a grin.And then next year, well, only Sneaky Sam knows what he will dream up for the 2014 Legislative Session in order to eliminate property tax deductions.

2 Responses

The goal is to create a business-friendly state. By eliminating the income tax, the Governor hopes to achieve this goal. Unfortunately, that money has to come from somewhere (despite the fact that he ignores the recent court decision about school funding) and he can do so with the elimination of these popular deductions AND raiding the KDOT fund. This will be a band-aid to cover the anticipated loss of revenue – of course, the legislature will be sure to cut services to meet the constitutional requirement of a balanced budget.

So the bottom line is this: we’ll end up with a business-friendly state, all right, but in the process our highways will go to Hell (figuratively anyway if not literally). And did I mention that our students will be short-changed in the classroom and that the truly needy among us, like Finn Bullers, will end up living on the streets? Details, details.